ANZ New Zealand says it'll call and repay subordinated bonds with a face value of NZ$350 million on their coupon reset date of July 23, but has made no mention of whether it'll make a fresh bond offer in their place.
Issued in the much higher interest rate environment of 2007, the bonds have an 8.23% coupon and ANZ had the option to rest them for another five years at a margin of 62 basis points over the five year swap rate.
In a letter to bond holders ANZ NZ's Treasurer Paul Daley says repayment of the principal amount of, and interest on, the NZX-listed bonds as at July 13 - the record date for the payment - will be made in accordance with investors' instructions.
BNZ, which also recently called a NZ$350 million subordinated bond that was issued in 2007 and had an 8.42% coupon, subsequently raised NZ$200 million through the issue of a seven-year senior bond to institutional and habitual investors last week. They will receive interest of 5.57% per annum, with the bonds priced at a margin of 2.15% over the seven-year swap rate.
Although both banks could have reset the interest rate and kept the bonds on issue for another five-years, this type of subordinated, or tier two capital, bond is not expected to be recognised as capital under the Reserve Bank's Basel III bank capital adequacy standards, instead being regarded as debt. On top of this the current low interest rate environment would've seen investors' receiving a much lower interest rate. See more on this here.
And see ANZ's bond issuer page here.
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